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Nolan said "with a hint of menace" (his words) that the rollout of smart meters means the CMA's remedies have a limited shelf-life, and that therefore there is "a relatively nar- row window of opportunity" for the energy sector to demonstrate its co-operation. By contrast, Ofwat chief executive Cath- ryn Ross spoke in a much more positive manner, as she described the regulator's transformation towards a "fundamentally more pro-market" model. She said the new model could not be delivered by the regula- tor alone and would rely on those in the sec- tor "stepping up". Ross said it was "great to see this is happening", adding "you can see [those] changes in the sector already". She contin- ued: "We really saw companies embracing the transformation we started back in PR14". With regards to introduction of a com- petitive market for non-household water, 10 | 27TH MAY - 2ND JUNE 2016 | UTILITY WEEK Let market forces rule The regulators differ a lot in their tone towards their respective sectors, but both see the market as the solution. A s the bosses of both Ofgem and Ofwat spoke at the Utility Week Live keynote conference there was a notable differ- ence in the tone of their respective messages, but a united conclusion. Despite repeatedly saying he didn't want to fight the energy sector, Ofgem chief execu- tive Dermot Nolan made clear that he would if necessary. "I can say as the regulator to the industry, we at Ofgem want to take up the baton from the [Competition and Mar- kets Authority] and work with the industry to make these remedies work. I don't want to work against the industry. I will if I have to." Nolan said the provisional remedies put forward by the CMA in March "need the industry's backing to be fully effective" and warned that if it didn't get with the pro- gramme "plans to regulate electricity and gas prices more widely may go back on the table". The Future of Regulation UtilityWeek Live Total expenditure was introduced into the water sector in the last price review – giving water companies a single pot of money to spend from, rather than one each for capital projects and operational expenditure. In the Utility Week Live Wipro Water Theatre, this cropped up as the topic when the regulatory shi from outputs to outcomes – another shi for AMP6 – was debated. The panel, featuring Ofwat principal for analytics Ynon Gablinger, United Utilities supply chain and commercial director Martin Gee, and Arcadis head of asset management Luke Dirou, all agreed that totex, in combination with the What we learnt about totex TOTEX shi to outcomes, has given the water compa- nies greater freedom and flexibility to innovate and operate their systems – but also greater responsibility for the service they deliver to customers. Gee told delegates that the excuse some water companies had previously used – "we want to but Ofwat won't let us" – has now gone. "Totex gives us flexibility and the ability to take ownership or our delivery plans," he said. The panel agreed that there has been a shi in attitude from the companies, who are all beginning to adopt a different way of working. Gee said that United Utilities is embracing the totex regime by working with its partners to come up with solutions, rather than providing them with designs for capital projects to execute. This view contrasted, however, with opinion expressed in the keynote conference where speakers said water companies held a "capex "If the industry doesn't deliver on the CMA remedies, if it doesn't get competition back on track, in my view plans to regulate electricity and gas prices more widely may go back on the table." Dermot Nolan, chief executive, Ofgem In association with our keynote sponsors she said it had been "really great to see some companies making some big strategic choices about whether and how they want to play this space". Despite the difference in tone, both regu- lators focused firmly on market-led solutions. Ross said Ofwat was moving away from a regulatory model that was "rather admin- istrative, very much one size fits all, rather intrusive" and towards one which was "more framework based, more proportion- ate and targeted, and fundamentally more pro-market". She argued that markets would be "abso- lutely critical in informing, enabling and incentivising" the "transformational effi- ciency that the sector needs", saying they "create options" and "enable choices", which could reveal important information about "what companies should make, buy, and how they should do this". She said they could also reveal informa- tion to those outside the industry, "about the value they can add and the opportunities they can realise". Nolan said Ofgem had been forced to enact "a number of enforcement measures" in the past few years, which were in his view "necessary", but said he ultimately wanted to be as hands-off as possible. "I think the regulator, like the industry, actually hopes we don't have to resort to more regulation, that we don't have to resort to more interven- tion in the market," he said. "Use small data to provide big solutions" LUKE DIROU, ARCADIS